Early one Saturday morning last year Victor Cheng slipped out of bed without a word to his wife, Julia, climbed into his Toyota Camry and drove away from the apartment they share at Harvard University, where Julia is working toward a business degree. An hour and 20 minutes later, Cheng, ’95, was standing in a Rhode Island gas station buying PowerBall Lottery tickets. The jackpot that day stood at $300 million.
This was the same Victor Cheng who six months earlier had been a vice president at Live Person, a start-up company he helped take public, and the owner of stock options then valued at more than $1 million. It was the same Victor Cheng who had set out to forever blunt the memory of the opportunities denied his Chinese immigrant father. Victor Cheng wanted to retire by age 30.
His ticket never got punched. Not at his company, whose valuation plummeted—shrinking his $1 million to $9,000—and not in the gas station where he scratched off government cardboard. Cheng laughs now at the memory of his furtive dash to a lottery outlet. Even as it was happening, he recalls, “I was thinking about this person I used to be.”
He isn’t the only one. Hundreds, perhaps thousands, of Stanford alumni lost jobs over the past year or so. Some watched their companies fail. Some lost millions of dollars; others, whose unsold stock options were rendered worthless when their companies tanked, were worse off than they had been before the Internet bubble began. Dreamy visions of early retirement were replaced by worries about meeting mortgage payments. Jobless for the first time since leaving Stanford, some of these folks confronted the pure utility of employment—a means to pay the bills, get health insurance and have some place to go every day. Many of them are only now finding their way back to financial stability and emotional solidity.
Ask me; I know. I’m one of them.
I spent five and a half years in a stable job at Forbes magazine. In the summer of 2000 I left to write for Red Herring, a magazine fat with Internet advertising and, apparently, opportunity. I came to the party a bit late, however. By the time I arrived, six months after the stock market plunge in March 2000, the dot-com fallout was under way: Internet companies were folding all around us and taking their advertising with them. Three and a half months after I was hired, I was let go during the second of what became five rounds of layoffs. I’ve been freelancing ever since, dipping into savings when necessary to meet expenses, learning to deal with the nagging anxiety of not knowing where your next paycheck is coming from.
I’ve also been wondering about all those other people out there, especially Stanford people, whose fates were somehow similar to mine. How are they doing? Have they learned anything?
A recent New York Times article quoted a 1997 study showing that 77 percent of U.S. college students believed they would be millionaires one day. I wonder what that percentage would be today.
For a while, caught in the vortex of accelerating stock valuations and a seemingly bottomless supply of venture capital, would-be millionaires proliferated like online pet stores. Unfortunately, the widely shared conviction that such a payoff lay just around the corner prompted a lot of otherwise logical and likeable people to lose touch with their old values.
While I never expected to get rich—what journalist does?—my swanky salary clouded my judgment. I remember encouraging my brother, the second-in-command at a high-minded nonprofit, to consider better-paying jobs. From my chastened perspective, I regret that advice. Today, Walter looks like the smart one.
Other Stanford alumni I’ve been talking to confess to having changed their priorities back when being left out of the boom seemed like the worst possible fate.
“As painful as it is, even now, I think this recession is good for the American soul,” says Steve Basili, MBA ’98. “There was way too much extrinsic focus and reward [during the boom]. There were a lot of good times, but there was a collective losing sight of what is important.”
Like a lot of us, Basili came to this realization the hard way. One day last March, the consulting firm where he worked closed the doors of its San Francisco office. The sole provider for his wife and their 3-year-old twins, Basili made a tough choice—to abandon the consulting field and pursue a new career.
A pianist and studio musician, Basili is looking for a job in symphony orchestra administration. He and his family now rent an apartment in Redwood City, and live frugally. When they buy wine these days, it’s the $3 bottle from Trader Joe’s, a local discount grocer.
It sounds to me that there is both poetry and panic at this juncture in Basili’s life. He says he sometimes lies awake at night calculating the savings he is burning through every month. (I can relate.) Yet he’s embracing an old idealism with a new fervor. Basili reminds himself that most people in the world face economic insecurity daily. “Maybe we all were kicked out the door [of our lucrative jobs] kicking and screaming,” he says of himself and his laid-off classmates. “But I would venture to guess that, in five years, the majority of us will say it’s the best thing that happened to us. The biggest tragedy that could happen for me personally would be if I got a job again without having changed my thinking.”
The psychological trauma inflicted by losing one’s job shouldn’t be underestimated. Unemployment can feel like abject failure. One woman I spoke to, who requested anonymity—I’ll call her Laura Sumerville—admitted as much.
Sumerville worked in a middle-management job at a start-up for five years before it went bankrupt in January 2001. “You’re never quite prepared for that,” she says. “You keep hoping until the end. For a lot of us who go to Stanford, our identity is tied up in our career. You lose that part of your identity and you feel lost. There’s a big emptiness.”
Sumerville went to a couple of job interviews, but nothing jelled.
“I felt like my life was changing,” said Sumerville, who is in her late 30s. “I had been in control for so long. I had to deal with something that was way beyond my control.”
She has adjusted to a new role as a stay-at-home mom with two young children, and her husband is now the sole breadwinner. A year ago, she admits, such a situation would have seemed unfulfilling. “I’m more relaxed now when I’m home,” she says. “I’m not madly rushing around. It’s been good.”
I found evidence of a new gestalt in all my conversations with Stanford alums. The recession and the events of September 11 have oddly dovetailed to send them back to the hearth. Karen Fox is a good example.
Fox, ’95, moved to New York City early last fall to start her own company, Foxfire Marketing. In possession of a Harvard MBA and high hopes, she expected to build a name for herself in the rough and tumble New York business world. Six days after she landed in New York, the twin towers were attacked. Within a week, she was making plans to move back to Denver to be near her parents and siblings.
Whereas she used to feel tremendous peer pressure to succeed professionally, Fox says her classmates from Stanford and Harvard now understand her desire to go home. “The Internet world was so focused on money and on career and you have to be on the cover of Fortune,” Fox says. “I still want to achieve in life, but how I will measure my success has changed. It sounds grandiose, but now it’s, ‘How can I help people?’”
Rediscovering relationships was a powerful tonic for Joe Cha, a former Internet high-flier. I couldn’t help but laugh when I met Cha, ’90, MBA ’92, last fall in a coffeehouse in West Los Angeles. He fidgeted so much, he seemed to have just come out of a washing machine. I guess it’s no surprise. In late 2000, Cha’s stake in Xuma, an e-infrastructure company he co-founded, gave him a paper net worth of $80 million, according to private bankers who had hoped to take the venture public. He appeared on Oprah, on the millionaires version of the television show Blind Date and in scores of business publications, including Fortune.
But when he fell, it was fast and hard. As the market for IPOs disintegrated and Xuma’s worth plunged, he had a falling out with the company’s investors and departed with a modest payout. The journey that began when he launched Xuma with a fax machine in his apartment kitchen was over. A few days after leaving the company, Cha showed up on his adopted grandmother’s porch in Lincoln, Neb. He and Grandma Gibson resumed the crochet lessons he had begun with her when he was 8 years old
“I made her a hot pad. It was just . . . ,” Cha says, pantomiming a little air crochet. “I watched probably 800 hours of Antiques Roadshow. We went to church. We made fried chicken together.
“I had completely checked out on the important things—my family, Grandma Gibson,” he says. “It would have been nice if I had had these lessons and kept the $80 million, but I’d probably be an arrogant son of a bitch, because I was when I had it. I think because I’m kind of dumb that it had to be a smackdown to get to this.”
Cha told me he’s ready to go back to the workforce and “crush stones like a common laborer.”
Steve Stanford, ’87, didn’t seek solace in quite the same way, but his story has some similarities to Cha’s. In 1999, anointed by the press as one of the architects of the long-awaited synthesis between Hollywood and Silicon Valley, Stanford and some co-founders started an online entertainment company called Icebox.com.
Stanford’s bold belief that his company would challenge traditional entertainment companies attracted other believers. He persuaded about 100 people, including writers from The Simpsons and other popular television programs, to leave those jobs and join him. When venture funding dried up in late 2000, Icebox—having burned through $15 million—met a swift and crushing end. The day after a major investor pulled out, Stanford called a companywide meeting and stood encircled by his employees to deliver the bad news. Then the layoffs began.
“It was absolutely the most difficult thing, having to tell people you cared about that they were out of jobs,” says Stanford. “I knew all of them. I had been the one who had gone to great lengths to tell people we would be around as a company. This was right before the holidays. The timing couldn’t have been worse.”
In February of last year, Icebox shut down. With investors fleeing, there was no money for severance pay. Stanford and the other managers could only offer their employees the computers and stylish office chairs they had used. He and a friend, Cheryl Parnell, ’88, spent the better part of last year writing recommendations for Icebox’s former employees and trying to find them new jobs.
In the midst of the Icebox meltdown, Stanford and his wife, Andrea, also a former dot-com executive, welcomed their first child. Although he admits to experiencing “moments of terror,” about his family’s finances, Stanford told me he feels “much richer” on this side of the Internet bubble.
And despite Icebox’s failure, his entrepreneurial instinct lives on. As with many company founders whose supposed net worth drew as much media attention as the fundamentals of their business model, Stanford’s dream had more to do with creating a business than with becoming a millionaire. He is thinking about several ideas for new companies. And he hasn’t lost a businessperson’s optimism, a sense of hope that future opportunities will work out better. He’ll be back.
None of the people interviewed for this story professed nostalgia for the days of millionaire mania, the seductive sprint toward imagined riches. I don’t have any myself. I don’t even pine for that swanky salary. It came at me so fast I wondered if I deserved it. “It was a bewildering time,” recalls Victor Cheng. “You had a really strong temptation to do really stupid things because none of the smart things were working.”
After a lengthy hunt, Joe Cha eventually found work as a vice president at Yahoo! and has moved back to the Bay Area. As he said goodbye to his parents in Los Angeles, he sounded both subdued and determined. “I don’t think I’ll be the same way I was,” he told them. On New Year’s Eve, he got engaged.
Karen Fox takes inspiration in her memory of the sense of shared humanity in New York City right after the disaster, an absence of panic and the feeling that people needed each other. “Even with the recession,” she says, “it’s like we’re all in this together. It’s not like you need the bad, but the bad makes you appreciate the good.”
Cheng, who will not be a millionaire any time soon, is now a director of product management for Art Technology Group in Cambridge, Mass., and is beginning to feel comfortable in his new skin. “I no longer work 80 to 100 hours a week,” he says, “although I secretly feel like a slacker sometimes.”
He also has something he might have lost without a new perspective—his wife. “If the Internet bubble had continued, we might not have made it as a couple,” says Julia (Chi) Cheng, ’95. “We would have kept pushing the personal issues aside.”
With Victor singlemindedly focused on work, Julia found herself wondering if she could count on him. Now the Chengs make time for friends, are rediscovering old hobbies, enjoying a sense of balance. They’re trying to get pregnant.
“I have more confidence now that I have a partner in this guy,” Julia says. “Our quality of life has gone up dramatically."
That sounds rich to me.
Ann Marsh, ’88, is a freelance writer in Los Angeles.
